Disentangling the Effects of Large Minimum Wage and VAT Changes on Prices: Evidence from Mexico
Calderón Cerbón Mariana,
Cortés Espada Josué Fernando,
Jorge Pérez Pérez () and
No 2022-13, Working Papers from Banco de México
In January 2019, the authorities increased the minimum wage and decreased the value-added tax (VAT) in an effort to boost activity on the northern Mexican border. In this paper we estimate the effects of both policies on prices. We find that the upward pressures on prices due to the minimum wage hike were more than offset by the downward pressures associated with the VAT. In the absence of the VAT reduction policy, average prices in the northern Mexican border would have been higher. We estimate that the effects of the minimum wage on prices tended to be smaller for goods or services produced with a larger share of informal labor.
Keywords: Minimum wage; Value-Added Tax; Prices (search for similar items in EconPapers)
JEL-codes: H20 J38 J46 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-iue, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.banxico.org.mx/publications-and-press/ ... -DE5A371B05A9%7D.pdf (application/pdf)
Journal Article: Disentangling the Effects of Large Minimum Wage and VAT Changes on Prices: Evidence from Mexico (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bdm:wpaper:2022-13
Access Statistics for this paper
More papers in Working Papers from Banco de México Contact information at EDIRC.
Bibliographic data for series maintained by Subgerencia de desarrollo de sistemas ().